Market Leaders Change Top Companies by Market Capitalization from 1999

One of the discussions we have had many, many times with clients is about holding on to that one big winner in their portfolios.

Whether it was Exxon and General Electric in the early 2000s or it is Apple and Amazon today, investors like the idea of “one decision” stocks—just buy it and never sell. But far too often there is a cost to concentrating too much of one’s wealth in a single company, because nothing stays the same in the stock market. Today’s biggest winners eventually fade back into the pack. And that’s how it should be in a dynamic marketplace: Innovation, competition, and change are an inherent part of the system if the system is working well.

Sometimes, however, investors become fans of a stock that has done well. Exxon becomes their Yankees. General Electric becomes their Red Sox. But even though a sports team might win multiple championships, eventually another team comes along to win the ring or take the trophy. The same thing happens to the vast majority of companies. Holding on to a stock because you’ve become a fan is not an investing strategy. It can be a long wait for that company to be a leader again, if it ever happens.

Follow the link below to see how often the ten largest companies by market cap changed over the last 20 years. Of the big global names, Microsoft was the only company that made the top ten in all the periods shown. Even so, Microsoft went through a 16 year period without making a new all-time high.

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